Farmers in western Canada are sitting on millions of tonnes of grain, but they can’t get their bread.

It couldn’t have been a better year last year for farmers who grow wheat, canola, flax, barley and lentils among other grains, bringing the biggest yield ever, about 76 million tonnes, up 33 per cent from 2012.

But now those farmers can’t haul that harvest to market because of rail backlogs — and so they can’t get paid. Some are worried that if shipments don’t start to move faster, they won’t have the cash flow for spring planting.

“The elevators are full. The terminals are full. Farmers’ bins are full,” said Alberta farmer Gary Stanford, who serves as president of the Grain Growers of Canada

Farmers never imagined they would be in this situation. “We were thinking we could pay off some bills and maybe get a little ahead,” Stanford said. “The opportunity is slipping away, and prices are coming down.”

“We don’t want to mess up our markets in the future by not getting it to food processors, for livestock feed and to malting mills,” Stanford said, noting rail is the only way to ship grain because trucking is too costly.

Continued delays could have an eventual impact on consumers, with higher prices on finished products such bread or beer.

“If we are unable to get our product to processors or any place that’s manufacturing food, that drives costs up, and that drives up the price of the final good,” said Wade Sobkowich, executive director of the Western Grain Elevator Association, which represents grain companies.

“There will be a cost for down time. And we are hearing that international customers are looking at other markets for their goods because there are concerned about the reliability of Canada to deliver.”

Nearly 60 million tonnes of grain are essentially trapped on the Prairies, sitting in elevators that are already full, or on farmer’s fields, because farmers cannot get enough rail cars to move the bumper crops, mostly to ports on the West Coast or to Thunder Bay to access the St. Lawrence Seaway.

Railways are already busy moving all sorts of goods, from consumer products to oil, and the extreme weather this winter has slowed movement across vast swaths of North America.

A threatened strike at Canadian National Railway this week by the Teamsters union brought the issue to forefront, with industry groups and Saskatchewan Premier Brad Wall urging Ottawa to take action to block a strike, warning of the dire economic consequences of a shutdown.

With the threat of intervention, the two sides quickly reached a tentative agreement — the second one since October — averting a strike this weekend. But the root problem still remains: too much grain and not enough rail cars.

The railways blame the logjam on the record yield as well as extreme winter weather that has settled in over much of Canada, forcing them to use shorter cars, meaning fewer grain shipments can get out.

Stanford suspects Canada’s two railways, CN and Canadian Pacific, weren’t expecting such a large crop, but argued they should be able to adapt to demand.

“If during harvest time my combine broke, I’d have to find another to get it done,” he said. “Find another locomotive and get it going.”

Some farmers delayed selling their grain in the hopes that prices would rise, but the reverse has happened.

In August, the average price for wheat and canola — the two biggest crops — was about $357 a tonne, but now it’s hovering around $275 a tonne.

Sobkowich said ripple effects of the backlogs are huge.

“We have ships waiting (on the west coast) — 35 empty or partially filled,” he said. “We have penalties to have ships waiting, $12,000 to $18,000 per vessel per day.”

He argues that the federal government needs to step in and introduce tougher regulations and penalties to rail companies if shipments don’t get through.

“The railways are maximizing returns to shareholders,” he said. “The size of the service pie is finite. We’re competing with other industries, such as mining, oil and gas, potash.

“The challenge is to grow the size of the service pie so they aren’t just shifting capacity from one to another,” said Sobkowich, who argues railways need to invest in surge capacity, keeping locomotives, extra crews and cars at the ready when there is high demand.

Both CN and CP have reported strong profits in recent quarters, with significant jumps in share price. CP, which is has new leadership under CEO Hunter Harrison, has sold off locomotives and railway cars to ensure a leaner operation.

CP spokesman Ed Greenberg said the railway has been responding by putting the necessary resources in place, noting grain is the single largest commodity the railway moves.

“This is a complex issue that involves an extraordinary year for Canadian grain in terms of crop levels, and the extreme weather we have been experiencing across the Prairies,” Greenberg said in an interview.

“We are working with customers directly on a week-to-week basis to try to address their shipping needs as quickly and efficiently as possible.”

CN spokesman Mark Hallman says the record crop has generated a significant increase in grain car orders, noting CN cars were at grain elevators in Western Canada at a record-setting pace this fall, up 12 per cent compared with a five-year average.

Unloading figures at West Coast port terminals were also up almost 10 per cent from August to December, compared to a five-year average, he said.

But the extreme cold that hit in early December has hampered transportation performance for all commodities including grain, Hallman said in an email, noting Winnipeg has had 32 days below -25 degrees Celsius since Dec. 1, and 21 of those days were below -30.

When the temperature is forecast to drop below -25, CN plans for shorter trains, which means more trains are running on the network, leading to more crews and more trains meeting and passing, using up network capacity.

“This year, we have had to operate with shortened trains for much longer periods, and over much broader territory, than normal,” Hallman said.

Earlier this week, federal Agriculture Minister Gerry Ritz announced new monthly reporting mechanisms for the railways on shipping loads, up from every three months.

Ritz spokesman Jeffrey English said all options are on the table as the government works with industry to find efficiencies across the supply chain.

Manitoba farmer Dennis Thiessen, who grows corn, canola and soybeans on 340 hectares near Steinbach, Man., says half of his crops are still sitting in bins waiting for a way to ship them to processors, just a few hundred kilometers away within the province.

“The backlog is causing problems even for the domestic market,” said Thiessen, who said he’s never experienced such long delays in 35 years of farming.

“I have buyers. They are booking way into the future,” Thiessen said. “A lot of times they won’t give you a price, when they don’t know when you can ship.

“I’m frustrated that (shipping delays) have caused our prices to drop, as much as 20 per cent.”

While he expects to be able to juggle cash flow challenges, Thiessen says not all farmers are in that position as banks seek payments on loans and suppliers want to be paid.

“I would hope banks are understanding as long as there is crop in the bin,” he said.

As farmers continue to deliver bigger yields thanks to new technology, Thiessen said railways need to figure out a way to deliver the grain.

“We need to know from the railways if they have a plan,” he said. “We can produce more crops. But we need to have confidence the railways can move the crops.”

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